Week ending 27th June 2014

It’s all over for England – again!

A lot happens over two weeks.  For example two weeks ago England were still in the World Cup, poised to achieve one of their shortest survival times in this competition for many years.  Much has and will be written and spoken about why England did not do better.  I am not much of a football fan and certainly not a football expert but a few points do occur to me.

First we have been trying to win the World Cup for 64 years and have only managed to do it once, back in 1966.  The FA have been in charge of the England World Cup campaigns throughout that time and have failed 15 out of 16 times, yet it is assumed they will continue to be in charge of future campaigns.  If there was a World Cup for doing the same thing over and over again but not getting a different result, then the FA wins hands down.

Second this was probably the most highly paid squad of England players we have ever sent to a World Cup.  As a group their combined earnings as professional footballers are higher than most if not all of the teams from the other countries in the competition.  Yet their skills, pace and all round footballing nous are clearly not matching the standards of many other countries’ teams.  Even though we see this demonstrated every four years no one in football will recognise that we need to address the problem of “not being good enough”. Top dollar does not guarantee top performance, in fact it is the other way round.  Consistent and continuously improving top performance will deliver top dollar.

Juncker Muncker

Talking of not being good enough this is what our Prime Minister has been saying about Jean-Claude Juncker, the ex-Prime Minister of Luxembourg who, in spite of Mr. Cameron’s efforts has been nominated as President of the EU Commission.  Juncker himself seems to think he was already elected but there you go.

Cameron saw him as an arch-federalist who believes that more integration and regulation from Brussels is the future for the EU.  As usual with this kind of appointment no one had ever heard of Juncker when he was proposed for this post.  He ought to be grateful to Cameron because at least we all know who he is now – he is the man in the grey suit with a drinking problem.

In the end only Cameron and the Hungarian PM voted against Juncker.  EU leaders are now so used to fudges and compromise that they appear incapable of any other kind of decision or is it non-decision.  They seem more upset that Cameron forced a vote on the matter thus requiring them to make a decision than by his actual objections to Juncker having the job.  Whilst Cameron has had his critics for the way he has handled this in my view he has actually started from the right place.  When something needs to change but no one is prepared to recognise this then you have to confront those people with the need for change.  This is the only way of getting people engaged, even if initially this engagement takes the form of resistance to change and being pretty upset with you.  This is exactly what happened so I think Cameron has done this right.  My concern is does he know he has and does he know what to do next?  Or was he just being a politician and playing to the Euro sceptic gallery in the Tory party?

Tesco and its officer corps

The Tesco story continued with an understandably fractious AGM last week. However what interested me more were two appointments made in the latest reshuffle of Tesco’s top management.  They now have a “Chief Customer Officer” and a “Chief Creative Officer”.  The latter position was filled by Matt Atkinson, previously Chief Marketing Officer.  I hadn’t realised that Tesco had so many “Chiefs” and that they were all officers.   So many Chief Officers implies there must be lots of other “officers” around who, whilst they may not be Chiefs must still be officers and jolly important they sound too.

On the other hand though when a business is losing market share because it is clearly losing touch with its customers and where all its other ranks/Indians are looking thoroughly miserable is this Chief Officer stuff just a manifestation of the problem?  I mean I ask you, “Chief Customer Officer”!  Does that sound like an answer to the problem?

Strong pound – last thing we need!

With the British economy growing faster than any other in the so called developed world and good news coming so fast and so often that it almost becoming boring, there had to be some bad news in the mix somewhere.  It is creeping up on us in the form of a strong pound.  With the economy performing well and the prospect of interest rates increasing the pound will strengthen, making our exports more expensive with the risk that this will choke off both the recovery and the rebalancing of the economy towards exports.

For some reason in this country we seem to think we need to have it both ways, strong economy and a weak currency.  The fact is that if you have a strong, vibrant economy then you are going to have a relatively strong currency to go with it.  If we can only export successfully on the back of a weak currency then the reality is that we are just not competitive enough to achieve the long term and sustained rebalancing of our economy towards exporting.

The key factor is our productivity.  GDP is only just back above the point it reached before the financial crisis.  Spare capacity in the economy has so far provided all the productive capacity to achieve this.  Whilst there is now some tightening in certain sectors, overall businesses are still saying that they have capacity to fill.  What does not seem to be kicking in is an improvement in our economy’s ability to produce – productivity.  Interestingly studies show that successful exporters are often amongst the top performers in their sector – because they have had to be.  Exporting is good for your business because it forces you to be a better business, to cope with challenges like a strengthening currency.  If a stronger pound makes our exports too expensive then the problem is not with the currency, it is because we just aren’t good enough, like the England football team.

So that was some of the two weeks before this week. I hope you found some of the above thought provoking and useful for you and your business. I trust you had a good weekend and hope you have a great week this week.